The Shanghai-based SAIC Motor Corp, which owns the British automotive marque MG, is planning to file a lawsuit against the European Commission now that the latter has started imposing tariffs on Chinese electric vehicles.
SAIC’s legal action plan comes as the EC announced on Tuesday that it will slap 7.8-35.3% tariffs on EVs made in China from Wednesday. The measure is definitive and will last for five years.
Tesla, owned by American technology mogul Elon Musk, now faces a tariff of 7.8% when exporting its EVs from China to the European Union. It was the least hit by the EU’s tariff actions as it had cooperated with the bloc’s anti-subsidy investigation over the past 13 months.
Geely, one of the largest EV sellers in China, faces an 18.8% tariff while SAIC Motor faces the highest triff, 35.3%. Shenzhen-based BYD has to pay a 17% tariff.
All these additional tariffs will come on top of a 10% tariff for all automobiles imported by the European Union. That means SAIC will have to pay a tariff of 45.3%.
“China does not agree with or accept the ruling and has filed a lawsuit under the World Trade Organization’s dispute settlement system,” a spokesperson of the Chinese Commerce Department said Wednesday. ”China will continue to take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.”
The spokesperson also said that China has repeatedly pointed out that the EU’s anti-subsidy investigation of Chinese EVs contains a lot of unreasonable and non-compliant elements, and that it is a protectionist approach that aims to push forward unfair competition in the name of fair competition.
“In the anti-subsidy investigation, there were some wrong definitions of subsidies while the EC ignored some key information and opinions submitted by us,” SAIC told the Beijing Youth Daily. “The EC also inflated the subsidy rates of some of our projects.”
SAIC said it deeply regrets the EC’s final ruling as it had provided thousands of documents, including questionnaires, written defenses and hearing statements, to the EC for legal defense but still failed to change the situation.
It said it will bring the case to the Court of Justice of the EU to safeguard its legitimate rights and interests.
In 2023, China exported 1.55 million units of pure EVs, up 64% from 944,566 units in 2022, according to Chinese Customs. In terms of sales value, China’s exports of pure EVs increased 70% to US$34.1 billion in 2023 from US$14 billion in 2022.
The average price of China’s exported EVs was US$22,000 last year, compared with about US$23,300 in 2022.
China shipped 438,034 battery-electric cars to the EU in 2023. In the first half of this year, China exported 222,000 EVs to the EU, down 14.6% from 260,000 units in the same period of 2022. China Chamber of Commerce to the EU said the decline was a result of the negative impact of the EU’s anti-subsidy probe against Chinese EVs.
Some Chinese media said the implementation of the EU’s tariffs is a setback to Chinese automakers’ overseas expansion plan.
Caixin.com said in an article on Wednesday that as the EU is an important market to Chinese automakers, their growth will be slowed by the newly-imposed tariffs.
SAIC’s falling profits
The EU said on September 13 last year that it would initiate a 13-month investigation into whether government subsidies have helped Chinese EV makers win market share in Europe in recent years.
On July 4, the EU started imposing provisional tariffs on Chinese EVs. Since then, Beijing has initiated an anti-dumping investigation into the EU’s pork products and accelerated its ongoing probe of European brandy.
Now the tariffs imposed on Chinese EVs are here to stay for at least five years.
Some analysts have said that most Chinese EV makers can absorb the EU tariffs as their products are still cheaper than European ones even after they doubled their selling prices in Europe from the levels in China.
However, SAIC is having a falling margin problem due to rising competition from rivals such as BYD in China.
In the first half of this year, SAIC sold 1.82 million units of automobiles, including the traditional and new energy cars, down 13.9% from a year earlier. Its total revenue fell 12.8% to 284.7 billion yuan (US$40 billion) for the same period while net profit, excluding one-off items, plunged 82% to 1.02 billion yuan.
The state-owned SAIC, the second largest EV maker in China after BYD, saw its new energy car sales rose 29.9% to 524,000 units in the first half of 2024. BYD’s sales rose 28.4% to 1.61 million units for the same period.
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